RSA Group, the UK based insurance group, has cut its main Group Volatility Cover, an aggregate reinsurance protection, as it balanced cost against the protection it offered at the January 2021 reinsurance renewals.
RSA has cut the Group Volatility Cover (GVC) reinsurance tower by one-quarter, only electing to place it to 75% at the January renewal.
“We chose to place 75% of the GVC in order to balance the cost versus benefit of this protection,” the insurer said.
Which has now reduced the aggregate reinsurance limit from RSA’s GVC from the £150 million it had in 2020, down to £125 million for 2021.
The GVC protects RSA against losses from catastrophe events, as well as individual large losses, across its Property and Construction & Engineering portfolios.
GVC qualifying losses accumulate across the calendar year and attach at a pre-defined point.
While the limit is down, due to only being 75% placed, RSA has lowered the aggregate attachment point of the GVC slightly at the same time.
For 2021 the GVC attaches when RSA’s total qualifying losses exceed £160 million. A year ago the attachment point for the GVC was £170 million.
The qualifying threshold for individual loss events remains at £10 million for catastrophe events, but for large risk losses it has dropped by half to just £5 million at the renewal.
So despite cost having been a key consideration, the lower aggregate attachment point of RSA’s GVC reinsurance, alongside this lower deductible for individual large risk losses, perhaps makes the reinsurance protection the GVC provides more responsive for the insurer.
Also at the January 2021 renewals, RSA purchased additional aggregate reinsurance cover for large losses below C$10 million in Canada.
However, the company chose not to renew its specific large loss aggregate covers in the UK and Scandinavia.
Overall, RSA’s retentions remain at £75 million for the UK and Europe combined, £50 million for Europe excluding the UK and $75 million for Canada.
In 2020, RSA recovered for losses due to the COVID-19 pandemic under its GVC and Group Cat reinsurance programs.
In total, RSA reports £631 million of reinsurance recoveries for 2020, down slightly from the £727 million received in 2019.